SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended January 31, 1998
Commission File Number: 0-24312
AGRI-NUTRITION GROUP LIMITED
State of Incorporation: Delaware I.R.S. Employer I.D. 43-1648680
Riverport Executive Center II
13801 Riverport Drive
Suite 111
Maryland Heights, MO 63043
(314) 298-7330
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
The number of shares of common stock outstanding at March 14, 1998 is 9,316,780
shares.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Index
- --------------------------------------------------------------------------------
Page
Financial information
Financial Statements
Consolidated Balance Sheet -
October 31, 1997 and
January 31, 1998 (unaudited) 1
Consolidated Statement of Operations -
three months ended January 31, 1997
and 1998 (unaudited) 2
Consolidated Statement of Cash Flows -
three months ended January 31, 1997
and 1998 (unaudited) 3
Consolidated Statement of Shareholders' Equity -
three months ended January 31, 1998
(unaudited) 4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Other information
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
Signature 13
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Consolidated Balance Sheet
Page 1
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, January 31,
1997 1998
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 145,505 $ 106,367
Accounts receivable 3,817,417 4,440,923
Inventories 6,355,310 6,507,787
Prepaid expenses and other assets 1,260,672 1,640,517
---------------- -----------------
11,578,904 12,695,594
Property, plant and equipment, net 5,788,688 5,719,320
Goodwill 8,095,049 8,125,092
Other assets 1,133,509 1,158,151
---------------- -----------------
$ 26,596,150 $ 27,698,157
================ =================
Liabilities and Shareholders' Equity
Current liabilities:
Current portion of long-term debt and notes payable $ 201,636 $ 158,971
Current portion of acquisition notes payable 719,716 719,716
Accounts payable 1,417,286 1,638,699
Accrued expenses 1,467,948 802,822
---------------- -----------------
3,806,586 3,320,208
Long-term debt and notes payable 5,665,955 7,461,150
Acquisition notes payable 1,570,249 1,570,249
Commitments and contingencies (Notes 2 and 9)
Shareholders' equity:
Common stock ($.01 par value; 20,000,000 shares
authorized; 9,304,280 and 9,316,780 shares
issued and outstanding, respectively) 93,043 93,168
Additional paid-in capital 15,935,700 15,954,325
Accumulated deficit (395,841) (621,401)
---------------- -----------------
15,632,902 15,426,092
Cost of common stock held in Treasury
(46,850 shares in both 1997 and 1998) (79,542) (79,542)
---------------- -----------------
15,553,360 15,346,550
---------------- -----------------
Total Liabilities and Shareholders' Equity $ 26,596,150 $ 27,698,157
================ =================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Consolidated Statement of Operations (unaudited)
Page 2
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months
ended January 31,
1997 1998
<S> <C> <C>
Net sales $ 7,428,587 $ 7,636,129
Cost of sales 5,717,363 5,686,946
--------------- --------------
Gross profit 1,711,224 1,949,183
Selling, general and administrative expenses 1,601,797 2,089,135
Research and development 47,746 45,806
--------------- --------------
Income (loss) from operations 61,681 (185,758)
Interest expense (166,650) (183,474)
Other income 29,523 2,468
--------------- --------------
Loss before income tax benefit (75,446) (366,764)
Income tax benefit 30,188 141,204
--------------- --------------
Loss from continuing operations (45,258) (225,560)
Income from discontinued operations, net 15,274
--------------- --------------
Net loss $ (29,984) $ (225,560)
=============== ==============
Basic net loss per common and common equivalent share (Note 4):
Loss from continuing operations $ -- $ (.02)
Loss from discontinued operations
--------------- --------------
Net loss $ -- $ (.02)
=============== ==============
Diluted net loss per common and common equivalent share (Note 4):
Loss from continuing operations $ -- $ (.02)
Loss from discontinued operations
--------------- --------------
Net loss $ -- $ (.02)
=============== ==============
Basic common and common equivalent
shares outstanding (Note 4) 8,368,090 9,313,927
=============== ==============
Diluted common and common equivalent
shares outstanding (Note 4) 8,368,090 9,313,927
=============== ==============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Consolidated Statement of Cash Flows (unaudited)
Page 4
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<TABLE>
<CAPTION>
For the three months
ended January 31,
1997 1998
<S> <C> <C>
Operating activities
Net loss from continuing operations $ (45,258) $ (225,560)
Adjustments to reconcile net loss to net
cash used in operating activities:-
Depreciation and amortization 207,138 264,349
Income from discontinued operations, net of taxes (Note 8) 15,274
Change in net assets from discontinued operations (Note 8) 1,236,556
Changes in operating assets and liabilities:
(Increase) in accounts receivable (715,368) (623,506)
(Increase) decrease in inventories 6,385 (152,477)
Increase in prepaid expenses and other (94,676) (504,476)
Increase (decrease) in accounts payable (638,233) 221,413
(Decrease) in accrued expense (374,153) (665,126)
---------------- -----------------
Net cash used in operating activities (402,335) (1,685,383)
---------------- -----------------
Investing activities
Purchase of property, plant and equipment (120,517) (125,035)
---------------- -----------------
Net cash used in investing activities (120,517) (125,035)
---------------- -----------------
Financing activities
Proceeds from long-term debt and notes payable, net 504,465 1,752,530
Issuance of common stock to directors and officers 18,750
Purchase of treasury stock (29,556)
---------------- -----------------
Net cash provided by financing activities 474,909 1,771,280
---------------- -----------------
Decrease in cash and cash equivalents (47,943) (39,138)
Cash and cash equivalents, beginning of period 2,186,877 145,505
---------------- -----------------
Cash and cash equivalents, end of period $ 2,138,934 $ 106,367
================ =================
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Consolidated Statement of Shareholders' Equity (unaudited)
Page 5
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Common Stock in
Common Stock Treasury, at Cost
Number Additional Number
of Par Paid in of Accumulated
Shares Value Capital Shares Amount Deficit Total
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, November 1,
1997 9,304,280 $ 93,043 $ 15,935,700 (46,850) $ (79,542) $ (395,841) $ 15,553,360
Issuance of stock to
directors and
officers 12,500 125 18,625 18,750
Net loss (225,560) (225,560)
--------- ---------- ------------ ------- ---------- ---------- ------------
Balance, January 31,
1998 9,316,780 $ 93,168 $ 15,954,325 (46,850) $ (79,542) $ (621,401) $ 15,346,550
========= ========== ============ ======= ========== ========== ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Notes to Consolidated Financial Statements (unaudited)
Page 5
- --------------------------------------------------------------------------------
1. Unaudited consolidated financial statements
The consolidated balance sheet as of January 31, 1998, the
consolidated statement of operations for the three-month periods ended
January 31, 1997 and 1998, the consolidated statement of cash flows for
the three-month periods ended January 31, 1997 and 1998 and the
consolidated statement of shareholders' equity for the three-month period
ended January 31, 1998 have been prepared by Agri-Nutrition Group Limited
(the Company) without audit. In the opinion of management, all
adjustments (which include only normal, recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at and for the periods ended January 31, 1997 and 1998 have been
made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted where inapplicable.
The results of operations for the periods ended January 31, 1997 and
1998, respectively, are not necessarily indicative of the operating
results for the full year.
The consolidated financial statements have been restated to
reflect the Company's Ingredients segment as a discontinued operation in
accordance with Accounting Principles Board Opinion No.
30, "Reporting the Results of Operations" (APB 30) (see Note 8).
2. Organization
Agri-Nutrition Group Limited (the Company), a Delaware
corporation, was organized on July 20, 1993, to acquire and operate
businesses in the domestic and international food, agriculture and pet
industries. In September 1993, through its wholly-owned subsidiary, PM
Resources, Inc. (Resources), the Company acquired certain assets and
assumed certain liabilities of the Health Industries Business (the
Business) of Purina Mills, Inc. (Purina). See Note 14 to the Company's
Consolidated Financial Statements included in the Company's annual report
to shareholders for the year ended October 31, 1997 (1997 Annual Report)
for further discussion of related matters involving Purina. Resources
commenced operations on September 9, 1993, the effective date of the
acquisition of the Business. Resources formulates, manufactures and
distributes feed additives, medicated treatments, anthelmetics,
nutritional supplements, cleaners and disinfectants, pest control
products, home, lawn and garden products, and specialty compounds.
Effective March 31, 1995, the Company purchased substantially
all of the net assets and business of Zema Corporation (Zema). The
Company also purchased substantially all of the net assets and business
of St. JON Laboratories, Inc. (St. JON) effective August 31, 1995. In
September 1997, the Company acquired Mardel Laboratories, Inc.
(Mardel). Zema, St. JON and Mardel formulate, package, market and
distribute pet health care, veterinary and grooming products
domestically and abroad.
See Notes 2 and 4 to the Company's Consolidated Financial
Statements included in the 1997 Annual Report for additional information
related to the acquisitions of Zema, St. JON and Mardel, including
information regarding the additional purchase price which must be paid to
the former owner of Zema if Zema achieves certain financial goals. In
addition, see Note 3 to the Company's Consolidated Financial Statements
included in the 1997 Annual Report for information about the
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Notes to Consolidated Financial Statements (unaudited)
Page 6
- --------------------------------------------------------------------------------
Company's acquisition of the worldwide patents, active ingredient
inventory, registrations and rights to Bromethalin (the "Bromethalin
Assets"), a highly effective and proprietary rodenticide serving
agricultural and Pest Control Operator (PCO) markets, including
information regarding additional consideration to be paid based on
shipments of Bromethalin to Purina over a five-year period.
3. Summary of significant accounting policies
The accounting policies followed by the Company are set forth in
Note 6 to the Consolidated Financial Statements included in the 1997
Annual Report. The financial statements included herein should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
included in such report.
Net loss per common and common equivalent share
Commencing with its fiscal 1998 first quarter, the Company is
subject to the provisions of Statement of Financial Accounting Standards
No. 128 "Earnings Per Share" (FAS 128) that was adopted by the Financial
Accounting Standards Board in February 1997. FAS 128 simplifies the
standards for computing earnings per share and makes them comparable to
international earnings per share standards. The adoption of FAS 128 does
not affect the Company's fiscal 1998 first quarter financial statements
and management does not expect it to have a material impact on the
Company's future financial statements.
4. Inventories
Inventories consist of the following:
October 31, January 31,
1997 1998
Raw materials $ 4,049,028 $ 3,266,895
Work-in-process 501,801 569,165
Finished goods 2,081,771 2,946,188
------------- ------------
6,632,600 6,782,248
Less: reserve for excess
and obsolete inventories (277,290) (274,461)
------------- ------------
$ 6,355,310 $ 6,507,787
============= ============
5. Financing
The Company has revolving credit facilities which aggregated $7.9
million at January 31, 1998. In June 1997, the Company modified its
existing credit agreements increasing the aggregate lines by $650,000,
extending their maturity dates through March 31, 1999, lowering the
interest rates and commitment fees charged and revising certain of the
debt covenant calculations. The amended facilities consist of up to an
aggregate of $4.8 million in revolving credit lines, the available amount
being based upon specified percentages of qualified accounts receivable
and inventory, and a $3.35 million revolving credit line with available
amounts being reduced $125,000 per quarter. The
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Notes to Consolidated Financial Statements (unaudited)
Page 7
- --------------------------------------------------------------------------------
interest rate ranges from prime minus .25% to prime plus .5%, depending
on the Company's ratio of debt to net worth, as defined in the
agreements.
At January 31, 1998, the Company and its subsidiaries were in
compliance with all covenants related to its various financing
arrangements. Approximately $.7 million was available under these
facilities at January 31, 1998.
6. Related Party Transactions
See Note 13 to the Company's Consolidated Financial Statements in
the 1997 Annual Report for a discussion regarding related party
transactions.
7. Employee benefit plans
During the three months ended January 31, 1998, 12,500 shares and
options to purchase 65,000 shares of the Company's common stock were
granted to employees in connection with the Company's 1996 Incentive
Stock Plan. The exercise price of the options was $1.375 per share, which
approximated the fair value on the dates of grant. These options vest
ratably over two years from the date of grant and will expire ten years
from the grant date. No shares or options were issued in connection with
1995 Incentive Stock Plan or the Company's 1994 Incentive Stock Plan. See
Note 12 to the Company's financial statements in the 1997 Annual Report
for a discussion of the Company's incentive stock plans.
8. Discontinued operations
In June 1997, the Company discontinued the distribution of
ingredients to Purina. Consequently, in July 1997, the Company
distributed all of its remaining ingredients inventories to Purina and
discontinued its operations in this area. This segment of the Company's
business has been accounted for and presented as a discontinued operation
in accordance with APB 30 for all periods reflected herein. At October
31, 1997, substantially all of the net assets relating to the ingredients
segment have either been disposed or have been deployed into the
Company's existing operations.
Management does not anticipate that the ingredients segment will
have any significant operations in the future. Furthermore, management
does not believe that there are any separately identifiable fixed assets
related to the ingredients segment and proceeds, if any, related to
disposition of such net assets subsequent to the June 1997 measurement
date have not to date and are not expected to result in a material net
gain or loss in future periods. However, the ultimate financial impact of
the discontinuation of the segment could differ from management's current
estimates.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Notes to Consolidated Financial Statements (unaudited)
Page 8
- --------------------------------------------------------------------------------
There were no net assets from discontinued operations at period
ending October 31, 1997 and January 31, 1998. The operating results of
the discontinued operations are summarized as follows:
For the three months ended
January 31,
1997 1998
Net sales $ 2,728,220 $ --
----------------- -----------------
Income before tax provision $ 25,462 $ --
Income tax provision (10,188) --
----------------- -----------------
Net income $ 15,274 $ --
----------------- -----------------
9. Commitments and contingencies
From time to time, the Company becomes party to various claims and
legal actions arising during the ordinary course of business. Management
believes that the Company's costs and any potential judgments resulting
from such claims and actions will be covered by the Company's product
liability insurance, except for deductible limits. The Company intends to
defend such claims and actions in cooperation with its insurers. It is
management's opinion that, in any event, their outcome would not have a
material effect on the Company's financial position or results of
operations.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 9
- --------------------------------------------------------------------------------
Overview
Organized in 1993, the Company manufactures and distributes animal health
and pet care products. In September 1993, the Company, through its PM Resources,
Inc. subsidiary ( Resources), acquired the Health Industries Business of Purina
Mills, Inc. which formulates, manufacturers and distributes animal health
products and to a lesser extent, home, lawn and garden, and other products. In
July 1994, the Company completed its initial public offering of Common Stock
(IPO), the net proceeds of which were approximately $12.1 million. Effective
March 31, 1995, the Company purchased substantially all of the net assets and
business of Zema Corporation (Zema), a formulator, manufacturer and supplier of
health care and grooming products to the pet industry. Effective August 31,
1995, the Company purchased substantially all of the net assets and business of
St. JON Laboratories, Inc. (St. JON), a developer, manufacturer and marketer of
oral hygiene, dermatological and gastrointestinal products for dogs and cats. In
September 1997, the Company purchased substantially all of the net assets and
business of Mardel Laboratories, Inc. Mardel is a developer, manufacturer and
marketer of high quality care products to the pet industry with expertise
extending to fresh water and marine fish, birds, dogs, cats, small animals and
pond accessories.
The Company's results of operations presented and discussed herein only
include the results of Mardel's operations subsequent to its acquisition by the
Company in September 1997.
The Company historically reported certain financial information for two
segments - ingredients and specialty products. Ingredients consist of feed
products that are purchased or blended by the Company and distributed for Purina
(see Note 15 to the Company's Consolidated Financial Statements included in the
1997 Annual Report). Specialty products consist of all other products
formulated, manufactured, and distributed by the Company to various customers,
including Purina. Included in the specialty products segment are sales of
private label and branded products for which the Company manufactures goods
using registrations and/or formulas owned by the Company, and sales of products
manufactured under contract for which the Company manufactures products using
the customers' registrations and/or formulas.
Given the acquisitions of businesses with branded, consumer-targeted
products and the continued emphasis on growth of the specialty product segment,
the significance of the ingredients segment had decreased in fiscal 1996 and
1997. As discussed in prior reports, management expected this trend to continue
in the future. In June 1997, the Company discontinued the distribution of
ingredients to Purina. In July 1997, the Company distributed all of its
remaining ingredients inventories and discontinued operations in its ingredients
segment. This segment is accounted for as discontinued operations in accordance
with Accounting Principles Board Opinion No. 30, "Reporting the Results of
Operations". Accordingly, the Company has reported the ingredients segment as
discontinued operations and the consolidated financial statements have been
reclassified to report separately the financial position and operating results
of the segment. The Company's consolidated operating results for years ended
October 31, 1997 and 1998 have been restated to reflect the Company's continuing
operations related to its specialty products business. Net assets for the
ingredients segment no longer meets the requirements for segment disclosure
under generally accepted accounting principles.
In the fourth quarter of 1997, the Company formed the Pet Health Care
Division, which is comprised of St. JON, St. JON VRx, Zema and Mardel. The
integration of these companies is expected to produce certain operating
synergies, creating a platform for continued expansion. Costs associated with
the integration are not expected to be material to the Company's consolidated
results of operations. The Company continues to pursue selective complementary
acquisitions, alignments and/or licenses in support of its core businesses.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 10
- --------------------------------------------------------------------------------
Three Months Ended January 31, 1997 Compared to Three Months Ended January 31,
1998
<TABLE>
<CAPTION>
1997 1998
<S> <C> <C> <C> <C>
Net sales...................................$ 7,429 100.0% $ 7,636 100.0%
Cost of sales............................... 5,718 77.0 5,687 74.5
Gross profit................................ 1,711 23.0 1,949 25.5
Selling, general and
administrative expense.................... 1,602 21.6 2,089 27.4
Research and development.................... 48 .7 46 .6
Operating income (loss)..................... 62 .8 (186) (2.4)
</TABLE>
Total net sales increased 3% from $7.4 million in fiscal 1997 to $7.6
million for 1998. This increase reflects a 65% increase in sales of the Pet
Health Care Division due primarily to the acquisition of Mardel Laboratories in
September 1997 and strong growth in the pet oral hygiene product category. The
increase was partially offset by anticipated weakness in the agriculture portion
of PM Resources' business and the planned shift in timing of sales to certain
contract manufacturing and private label clients during the first quarter in
1997, but in later quarters in 1998.
Gross profit increased from $1.7 million in 1997 (23.0% of net sales) to
$1.9 million in 1998 (25.5% of net sales), primarily due to changes in the
Company's sales mix, which consisted of an increased proportion of sales of the
Pet Health Care Division, which generally has higher margins as compared to
sales of the Company's private label/contract manufacturing business.
Selling, general and administrative expenses increased from $1.6 million
in 1997 to $2.1 million in 1998 primarily due to the increased costs related to
Mardel Laboratories business, which was acquired in September 1997. The increase
in expenses includes certain redundant expenses that are being incurred
during the consolidation of certain manufacturing, marketing and overhead
expenses among the operating companies that comprise the Pet Health Care
Division. Such consolidation is anticipated to be completed by the end of the
second quarter of the Company's 1998 fiscal year.
The factors discussed above resulted in an operating loss of
approximately $.2 million during the three months ended January 31, 1998,
compared to operating income of approximately $.1 million for the three months
ended January 31, 1997.
Interest expense was approximately $.17 million in 1997 and $.18 million
in 1998, reflecting increased debt balances that resulted from the Company's
investment in Mardel Laboratories.
The effective income tax rate of the Company was 40% and 38.5% for 1997
and 1998, respectively. The aggregate amount of the deferred tax asset valuation
allowance at January 31, 1998 was approximately $.1 million.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 11
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
The Company's existing capital requirements are primarily to fund
equipment purchases and working capital needs. During April 1995, the Company
completed the acquisition of Zema, which required utilization of approximately
$3.2 million of net proceeds from its July 1994 initial public offering for the
acquisition and related expenses in 1995 and will require additional payments of
$300,000 plus interest prior to April 1998, and potentially additional payments
conditioned upon the achievement of certain operating criteria by Zema which
would be due in April 2000. In August 1995, the Company acquired the net assets
of St. JON, which required approximately $3.5 million of cash, the assumption of
certain liabilities aggregating approximately $1.5 million which were paid
within four months of closing, and an additional $2 million plus interest to be
paid in annual installments over six years commencing March 31, 1997. During
fiscal 1997, the Company utilized approximately $1 million of cash for payment
of this obligation and related accrued interest, and restructured the agreement,
with annual payments of $325,000 being required over the five years commencing
March 31, 1998. Effective May 1996, the Company acquired the worldwide patents
and other assets and rights to Bromethalin, which required payments of $1
million including related expenses at closing, and will require additional
consideration based on shipments of Bromethalin to Purina over a five-year
period. In September 1997, the Company acquired Mardel Laboratories, Inc. for
cash of approximately $1 million and stock valued at approximately $1.1 million.
As additional consideration for the acquisition of Mardel, the Company also
issued a note payable of $300,000 to the former owners of the acquired company
to be paid in cash and stock over a period of three years. With the acquisition
of Mardel, the Company utilized its remaining proceeds from its initial public
offering.
During the three months ended January 31, 1997 and 1998, cash used by
operations approximated $.4 million and $1.7 million, respectively, which was
primarily related to funding seasonal working capital requirements. The funding
of seasonal working capital in 1997 was partially financed by the generation of
approximately $1.2 million due to timing of receipt of amounts related to
ingredients business which was discontinued in July 1997. See Note 14 to the
Company's Consolidated Financial Statements included in the 1997 Annual Report.
These seasonal cash requirements were funded through utilization of available
credit facilities.
The Company has revolving credit facilities which aggregated $7.9 million
at January 31, 1998. The facilities consist of up to an aggregate of $4.8
million in revolving credit lines, the available amount being based upon
specified percentages of qualified accounts receivable and inventory, and a
$3.35 million revolving credit line with available amounts being reduced
$125,000 per quarter. The interest rate will range from prime minus .25% to
prime plus .5%, depending on the Company's ratio of debt to net worth, as
defined in the agreements. At January 31, 1998, the interest rate charged on
borrowings outstanding under the agreements, as amended, was 8.75%, which is the
bank's prime rate plus 1/4%. Approximately $.7 million was available under these
facilities at January 31, 1998. The Company and its subsidiaries are in
compliance with all covenants related to its various financing arrangements. The
agreements allow the Company to sweep all cash balances against outstanding
borrowings, thus reducing the Company's overall interest expense.
The Company's board of directors has authorized the repurchase of up to
500,000 shares of the Company's Common Stock. The amount of funds required will
depend upon the actual number of shares repurchased and the market price paid by
the Company for those shares. The Company will utilize available funds to
implement this stock repurchase. No shares were repurchased under this program
during
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Page 12
- --------------------------------------------------------------------------------
the first quarter of fiscal 1998. As of January 31, 1998, 46,850 shares had been
repurchased under this program at an aggregate cost of $79,542.
Management believes that the Company will generally have sufficient cash
to meet the needs of the current operations for the foreseeable future from cash
flows from current operations, available funds, and existing financing
facilities.
The Company has no plans to significantly increase any of its operating
subsidiaries' plant facilities capacity. Capital expenditures for the three
months ended January 31, 1998 were approximately $.1 million. Future capital
expenditures for the Company's operating subsidiaries are not expected to
significantly exceed historical amounts, which in prior periods approximated
current depreciation expense.
Quarterly Effects and Seasonality
Seasonal patterns of Resources' operations are highly dependent on
weather, feeding economics and the timing of customer orders. The results of
operations of the Pet Health Care Division historically have been seasonal with
a relatively lower volume of its sales and earnings being generated during the
Company's first fiscal quarter. In addition, consolidation of certain functions
within the Pet Health Care Division are anticipated to be completed by the end
of the second quarter of fiscal 1998.
<PAGE>
AGRI-NUTRITION GROUP LIMITED
Part II - Other Information
Page 13
- --------------------------------------------------------------------------------
Item 4. Submission of Matter to a Vote of Security Holders.
On March 5, 1998, the Company held its annual meeting of stockholders. At
the meeting, the stockholders re-elected Bruce Baker and Robert Schlutz as Class
2 Directors. The following table summarizes the voting:
Abstentions/
For Against/Withheld Broker Nonvotes
Bruce G. Baker 7,900,185 104,424 0
Robert W. Schlutz 7,924,185 80,424 0
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
None.
b. Reports of Form 8-K.
The following report on Form 8-K was filed during the fiscal quarter
ended January 31, 1998:
1. On December 12, 1997, a Current Report on Form 8-K/A-1 was
filed to report, pursuant to Item 2 thereof, the acquisition
of Mardel Laboratories, Inc.
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AGRI-NUTRITION GROUP LIMITED
/s/ Robert J. Elfanbaum
- -------------------------------------
Robert J. Elfanbaum
Vice President and Chief Financial Officer
March 16, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 106367
<SECURITIES> 0
<RECEIVABLES> 4440923
<ALLOWANCES> 0
<INVENTORY> 6507787
<CURRENT-ASSETS> 12695594
<PP&E> 5719320
<DEPRECIATION> 0
<TOTAL-ASSETS> 27698157
<CURRENT-LIABILITIES> 3320208
<BONDS> 0
0
0
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